Exclusive research identifies the funds that have attracted investors' money
since the launch of new Isas - and Neil Woodford's new fund takes the top
spot

Neil Woodford's new fund is the most popular home for investors' "super Isa" money, The Telegraph has established.

The star investor's Woodford Equity Income fund has been the best-selling fund at three of Britain's biggest investment shops since the introduction of the new £15,000 savings schemes on July 1.

Other popular funds among "new Isa" investors include one of Mr Woodford's former funds at Invesco Perpetual and a fund that invests in biotech companies.

To find out where super Isa investors are putting their money we asked three of Britain's biggest fund shops - Hargreaves Lansdown, TD Direct and Barclays Stockbrokers - to name their 10 best-sellers since the new Isa rules took effect at the start of the month.

The best-selling fund at each company was given a score of 10, while the 10th best-selling fund scored one. We then added up the scores at the three fund shops to arrive at a total, out of a maximum of 30. As Mr Woodford's fund was the best-seller at all three fund shops, it scored 30 points.

Funds with 'star' managers

Unsurprisingly, several of Britain's "celebrity" fund managers appear on the list.

While Mr Woodford's new Woodford Equity Income fund was the most popular, a fund that he used to run, Invesco Perpetual High Income, was in third place - it sold well at Hargeaves Lansdown and Barclays, although it failed to make TD Direct's top 10. It seems that investors have given Mr Woodford's replacement, Mark Barnett, their backing, as opposed to selling out of the fund and moving their money elsewhere.

Funds with strong recent performance

As is often the case, many of the funds that investors are buying have been top performers in recent years. While there is a certain comfort from buying a fund that has performed well over a certain time period, this does not mean that the feat will be repeated. In fact, investors who chase performance often turn out to have missed the boat and bought in too late.

One fund whose fantastic performance has attracted investors is Axa Framlington Biotech, which stands at second place in our league table. The fund has returned a staggering 120pc over three years, making it the best-performing fund over this period, according to FE Trustnet, the fund research firm.

But Tom Becket, who buys funds for Psigma Investment Management, said: "There are clear signs of overvaluation in certain parts of the stock market, particularly in the biotech and social media sectors. Biotech might be a great investment over the next 10 years, but I believe this is a classic case of 'rear-view mirror' investing. Valuations are stretched and hope is potentially dominating reality."

Meanwhile, three of the 20 most popular funds - Fidelity UK Smaller Companies and the two Marlborough funds mentioned above - invest in small British companies. Shares in these firms have risen by 160pc since 2009, as measured by the Numis Smaller Companies index, which covers the bottom 10pc of firms by value of the main UK stock market. This has given funds that specialise in this part of the market a boost.

But, as we reported in April, some experts have warned that this strong run cannot carry on forever. John Chatfeild-Roberts, a respected fund picker at Jupiter, is one who has cautioned against buying into smaller companies funds on the grounds that these shares are no longer cheap.

As well as investing in yesterday’s stars after their peak, last-minute buyers risk overlooking better-value investments that are yet to shine.

Tracker funds

A "tracker" fund - a fund that blindly follows a particular index - achieved joint fourth position in the table. The HSBC American Index fund costs just 0.1pc a year and aims to match the performance of the S&P 500 index. The US stock market is notoriously difficult for fund managers to beat, with only a handful achieving the feat over long periods.

Other trackers to make the list include the HSBC FTSE 250 Index fund, in equal ninth position, and the 11th-placed Legal & General Global Health & Pharmaceutical Index Trust, which tracks the performance of companies that make most of their revenues in the pharmaceutical and biotechnology industries. The Vanguard LifeStrategy 80pc Equity tracker also made the league table, at number 14. This fund invests 80pc of its money in shares, via different tracker funds, with the remainder in bond trackers. Vanguard's FTSE UK Equity Index fund shares 15th place with two other funds.

The funds that investors avoided

Just one bond fund - Royal London Sterling Extra Yield Bond - made the top 10 at any of the three brokers we contacted.

These funds, which buy IOUs issued by governments and companies, proved their worth during the early phases of the financial crisis. But returns have fizzled out over the past couple of years.

An expected interest rate rise in the next nine months is likely to spell losses for the majority of bond funds. This seems to have cooled investor demand.